Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for propelling India’s overall development and enjoys intense focus from Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads, and urban infrastructure development.
According to the Department for Promotion of Industry and Internal Trade (DPIIT), FDI in construction development (townships, housing, built-up infrastructure and construction development projects) and construction (infrastructure) activity sectors stood at US$ 26.17 billion and US$ 26.30 billion, respectively, between April 2000-December 2021. In FY21, infrastructure activities accounted for 13% share of the total FDI inflows of US$ 81.72 billion.
India is expected to become the third largest construction market in the world by 2025. 11.5 million homes a year are expected to be added making it a US$ 1 trillion a year market. In fact, China, India and US are expected to account for almost 60 per cent of all global growth in the sector by 2025. Almost 52 per cent of all construction activity is already taking place in the emerging markets, which is set to reach 63 per cent by 2025.
India is forecast to overtake Japan as the third largest construction market in the world with annual growth averaging 7.4 per cent annually. The construction industry in India registered a growth of 5.9 per cent in fiscal year 2012-13.
It is interesting to note that the real estate sector is expected to account for 43 per cent of the construction spend in India till 2016 aggregating approximately US$ 380 billion. The sector is a significant contributor to the GDP of the nation (8 per cent in fiscal year 2011-12) and amongst the largest employment generator (employing over 33 million people).
The sector has witnessed a housing boom in the recent years. In fact, experts are of a view that once the phase of global financial volatility passes, the construction sector in India could be amongst the fastest growing in the country.
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